As consultants, the last year has brought on a lot of work with companies who needed a lot of change. Here’s a glimpse of some of the problems we encounter in mature companies. The following profile is of a fictional company I’ll call Omega Contracting. This example depicts a typical company that has been run poorly, but sales are now off dramatically and the company must cut two people out of their overhead to make it. Take a moment and read through this list of employees and decide who you might let go.
• Andy is 37, the top salesman/production manager, and has worked there for 10 years. His performance with Omega has made everyone a lot of money, but his cocky attitude causes conflict within the office. Andy sometimes strays outside of his defined territory; the owner lets it happen to keep his top guy happy. Added incentives were placed on the new services and Andy has been pushing them. Andy is the only one to develop new clients over the last two years. Andy is proficient with his laptop but rarely visits jobs. His paperwork is often late and incorrect, but customers love him. Change orders are poorly billed. Andy sells $2.2 million a year, but two large developers account for $1.6 million of his volume.
• Ted is 51, a salesman/PM, and has been with the company since it began. Ted was the top foreman but a back injury 10 years ago took him out of the field and he was moved to sales. Ted’s estimates are accurate and jobs consistently come in on time. Ted is not receptive to change or the new products. Ted had great relationships with the three developers who have no work. Ted’s sales have dropped 60 percent over the past 18 months. In the past few months, Ted has recently picked up $100,000 in small jobs. Ted does not use his laptop and his reports are handwritten. Ted works 10 to 12 hours a day. Ted manages his jobs well and never misses change orders. One contractor accounts for $300,000 of the $800,000 Ted sells.
• Chris is 56, an estimator who has worked for Omega for 18 years. Chris is the owner’s best friend and came to work for Omega from a competitor when they went out of business. Chris is old school and inflexible. Chris tried sales for a while but was not successful and went back to estimating. Chris is not a very good teacher and has problems losing his temper at times. Chris spends too much time on the little details. His workload backs up, and he dumps work on others. Chris’ estimates used to bring in $2.5 million of commercial work; now they account for about $1.2 million. His closing ratio on bid work has dropped from 20 percent to 6 percent.
• Mary, the office manager, has worked there for 30 years. She is divorced, 51, and has three children at home plus custody of two grandchildren. Mary is the caretaker of the office and is seen as the office “mom.” Jennifer is her favorite employee and so she gives more work to Stephanie. Mary’s personal life gets in the way of work and leaves when there are problems at home. The monthly financial reports are not being completed on time. Even with the decreased amount of business, her work is piling up.
• Jennifer, the service administrator, is salesman Andy’s fiancée and is a divorced mother of 5-year-old twins. Jennifer is 28, cute, and drama follows her everywhere. It seems she is always on the phone with friends and planning the wedding instead of working. No one wants to cross her because of her hot temper. However, she is smart and capable. Jennifer has great computer knowledge and is very well liked by customers. Her work ethic is based entirely on the status of her relationship with Andy.
• Stephanie, sales administrator, is Chris the estimator’s oldest daughter, She is 35, recently divorced with no children. As a favor to Chris, Stephanie was supposed to be a temporary hire, but she has worked at Omega for nine years. She works hard but is somewhat mousy and not as busy since things have slowed.
So, who would you lay off? Frankly, there are numerous solutions. The real issue is poor management and the lack of accountability. Obviously, ownership was not managing the situation when times were good. Good times can cover up a lot of sloppy management. Loyalty to old-time employees, nepotism with inter-company family members and lack of accountability can be commonplace. Why did we offer this example? Maybe you can see a little of your own organization is some of these folks. What was acceptable in good times just will not work in today’s environment. Here are some of things the company might consider doing:
1. Terminate Mary and replace her with someone who will run the office professionally, and then let one of the others go. This will tighten up the administrative issues.
2. Let one project manager/estimator go and adapt accordingly. No matter who it is, others will have to pick up the slack. Nothing like a termination to get folks attention.
3. Immediately set company goals and hold each person accountable for their actions. Have a brief but accountable production and sales meeting each week to ensure everyone is on the same page.
4. Ownership and upper management must return to work and be visible each and every day. If ownership is not worried about their money, why should anyone else worry?
These are just some of many possible solutions. As consultants, we have walked into some pretty sloppy operations. Good times and high demand can cover up a lot of inefficiencies. Companies that are facing less revenue and sales downturns have to look internally and do what it takes to be profitable again.
Adapt or die is the motto for many organizations.
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